The adoption of smartphones is boosting ‘smart retail’, especially here in the UAE, where smartphone penetration reached 228 per cent in 2017.
Within smart retail, digital gifting (or e-gifting) seems to have taken off and retailers are viewing it as an important revenue stream.
As consumers increasingly adopt a digital-based lifestyle, e-gifting looks like a viable business model for retailers, who recognise that customers are swayed by the convenience it offers. Gift cards have always had a presence in the UAE. Furthermore, the proliferation of malls is encouraging customers to e-gift cards and redeem them at brick-and-mortar stores.
If we examine the digital gifting market, we will see the emergence of e-gifting as not only shaping the gifting industry, but helping attract new customers to use gift cards. By their nature, gift cards offer choice. And e-gifting goes that one step ahead by allowing redeemers to choose the product they like, online, from anywhere and anytime.
Digital gifting especially appeals to the millennials, who remain a key population demographic for online commerce. They spend more money online in a given year than any other age group. In many instances, consumers spend more than the value of the gift card, which results in more sales for retailers.
Millennial consumers are also interested in adopting alternative ways of giving gifts. Paperless gifting is a major attraction and we are looking at this segment to drive the growth of the omni-channel gift cards.
By launching omni-channel gift cards, retailers are not only making gifting easier but also acquiring more customers. Retailers are also looking for ways to link up rewards and incentive programmes with gift cards by offering customers a discount on their purchases when they buy a gift card.
By doing this, merchants can turn one-time shoppers into repeat customers and bigger spenders. The other benefit is that the rewards could also convince customers to top up their gift cards after use.
As retailers look to fully tap this segment, they must look at developing a digital gift card strategy. So the minute a customer walks into a store with a gift card on their mobile phone, they should be able to experience a seamless and convenient redemption process.
(Kiran Borkar is Head of eCommerce, Jumbo Group.)